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Tenant Paying Rent

Posted by capital on September 1, 2015
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Leverage with the landlord in lease negotiations often depends on the ability of the tenant to demonstrate their ability to pay rent on time and every month without fail.

Here are seven ways a tenant can show the landlord they can pay the rent:

  1. Consistent Cash Flow: Retailers with consistent cash flow month after month demonstrates stability and a reliable income stream.
  2. Debt to income ratio: Landlords are wary leasing space to retailers that have a lot of existing debt with several lenders. Retailers having un used credit lines will look favorable to the landlord
  3. Customer diversity: Landlords like tenants who have a variety of customers and with a large base of customers. For example, a local coffee shop with a limited menu that relies heavily on its “regulars” for steady income raises red flags for the landlord.
  4. Sufficient Credit: The owner of the business with a score of 720 and above shows the owner can manage their finances effectively and takes care of financial obligations.
  5. Strong Leadership: The landlord can bring up concerns and communicate effectively throughout the lease term if tenants have strong top level management with a noticeable chain of command.
  6. Sufficient Collateral: Retailers that own property, big ticket assets, or other collateral means the landlord can recapture monies owed.
  7. Personal Guarantees: For small retailers, the landlord will require the owner personally guarantee the lease. Signing a personal guarantee makes the owner personally responsible for paying the rent even if the business fails.

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